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Investing.com - BMO Capital has reduced its price target on Paychex (NASDAQ:PAYX) to $143.00 from $160.00 while maintaining a Market Perform rating ahead of the company’s fiscal first-quarter results, due September 30. Currently trading at $129.30, the stock sits near its 52-week low of $128.23. According to InvestingPro data, the company maintains impressive gross profit margins of 72.35%.
The firm cited several factors for the adjustment, including concerns related to cooling labor market conditions, uncertainty in new business trends in the company’s Flex segment, and perceived risks around growth contributions from Paycor.
BMO Capital noted that Paychex shares have underperformed compared to peers over the past quarter, largely due to these market worries affecting investor sentiment.
Despite the lowered price target, the firm suggested there could be "potential modest upside to revenue" in the first quarter, given an easy year-ago comparison in the Management Solutions segment.
The firm also pointed to a possible normalization of the headwinds that impacted Paychex’s fourth-quarter results, though it expressed "tempered conviction" about this potential upside.
In other recent news, Paychex is preparing to report its first-quarter fiscal 2026 results, with RBC Capital anticipating results modestly above consensus estimates and at the higher end of the company’s guidance range. Meanwhile, Stifel has adjusted its fiscal 2026 revenue estimate for Paychex, lowering it to $6.47 billion with a 3.5% organic growth rate, down from $6.54 billion and 4.8% growth. Stifel also reduced its earnings per share forecast from $5.44 to $5.38, citing a more conservative growth outlook. TD Cowen has also lowered its price target on Paychex to $140, maintaining a Hold rating and noting limited upside catalysts in the near term. BMO Capital initiated coverage on Paychex with a Market Perform rating and a $160 price target, highlighting the recent Paycor acquisition as a significant strategic move. Additionally, Paychex announced a regular quarterly cash dividend of $1.08 per share, payable on August 29, 2025. These developments reflect the company’s ongoing strategic adjustments and financial expectations as it heads into the new fiscal year.
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